February 1, 1995. Four red trucks pull up outside one of False
Creek's new residential high rises. Six men
get out. Four of them proceed to the entranceway
of the building at 289 Drake Street. Their
objective: to gain access to the communications
control centre for Concord Pacific's entire
Expo lands development. The remaining two
locate a service shaft, lift the cover and
begin their descent. Stamped onto the steel
manhole cover are the words 'BC Tel'. Stenciled
white letters on the trucks spell out the
corporate affiliation of the intruders: 'Rogers'.
The war of convergence is underway.

As corporate battles go, this one is fairly
recent. Only a decade ago,
technology and regulation combined to keep
telephone companies (telcos) and
cable companies each in their separate corners.
Telcos like BC Tel, Bell Canada,
and the six U.S. regional 'baby Bells' created
after the breakup of AT&T
provided the wire and switching circuits
for the transmission of sound:
low-frequency, analog, ever-so-human speech.
Cable companies like Rogers, Shaw
and Cogeco on the other hand, maintained
extensive networks of coaxial cable and
microwave relays to pipe a somewhat higher
frequency analog signal from station
to living room, where a little device know
as the idiot box turned it back into
television.

Then along came the microchip, and the microprocessor.
The digital
revolution. Increasingly, everything - words,
pictures, sounds - was being
converted into long strings of 1s (ones)
and 0s (zeros): digitized. Artists
discovered a new way of recombining information
into a new digital package
called multimedia. Pundits predicted that
the ability to reduce the entire world
into 1s and Os would forever transform our
view of the universe and of
ourselves.

For BC Tel, the digital revolution revealed
yet another way to make money. It
turned out that a lot of people were willing
to fork over hefty sums to have
digital information - credit card numbers,
database records, financial
transactions - shifted from one place to
another over the phone lines. Across
North America telcos spent billions converting
their lines and switches so they
could handle digital traffic.

For Rogers, the digital age dawned with the
realization that if cable was
going to compete with 500-channel satellites
- the so-called death stars - cable
customers would have to be able to get a
lot more networks than just the basic
ABCs, NBCs and CBSs. Customers were looking
for specialty channels and for
offerings like home shopping and movies on
demand. To deliver these last two,
Rogers had to spend several hundred million
to reconfigure its system so
information could flow bi-directionally,
from station to living room and back
again. Consumers had to be able to send out
a signal - "I want to watch The
English Patient tonight" - and receive a
signal back in the form of the movie.
Rogers invested heavily, laying down notoriously
expensive optical fibre, 700
kilometres in the Lower Mainland alone.

When their respective upgrades were in place,
both Rogers and BC Tel would
have extensive networks capable of the high-speed
transmission of digital
information. Each could then potentially
supplant the other. Rogers could take
over local phone service. BC Tel could move
into providing cable. Either could
move into new fields like home shopping,
electronic banking and Internet
service. That, in a nutshell is what is meant
by convergence. And whenever two
bodies are trying to occupy the same space,
the potential for conflict is
enormous.

In Vancouver, BC Tel struck first. Taking
aim at the keystone of the Rogers
empire - the monopoly on local cable service
- BC Tel signed a deal in 1993 to
provide cable service to Concord Pacific's
shining new development on the shores
of False Creek. A symbol of Vancouver's coming
of age as an international city,
Concord's bright new monoliths came wired
to the core with optical fibre, giving
them a built-in ability for the most sophisticated
voice and data
communications. All Concord needed to complete
its wired world was someone to
hook up TV service.

Together, BC Tel and Concord Pacific formed
a company called Pacific Place
Communications (PPC) whose sole purpose was
to obtain TV signals via satellite
and then pipe them in to each of the heavily
wired luxury condos at a price well
below that normally charged by Rogers.

Rogers' retaliation was swift. Through a
numbered company, Rogers bought a
condo in one of the Drake Street towers.
A Rogers VP moved in and promptly filed
suit against PPC, claiming he was being denied
access to the Rogers Community
Channel. Another Rogers employee went around
the Concord buildings with a
petition, trying to enlist residents in a
drive to demand the return of Rogers
service. No surprise, but few signed on.

Finally, in early February 1995, Rogers sent
at least a dozen of its trucks
into the Concord lands, apparently with the
intent of gaining access to BC Tel's
cable equipment. Tenants at 289 Drake reported
seeing Rogers employees popping
in and out of BC Tel manholes. A group of
Rogers technicians even tried to bluff
their way into PPC's control centre, claiming
Concord owner Li-Ka shing had
given them permission. That mission failed
when an alert PPC employee called
head office. It's impossible to say whether
other members of Rogers' raiders
accomplished their objectives, because the
company has steadfastly refused to
explain exactly what they thought they were
doing. News of the raid, however,
served to further darken the reputation of
a company already bruised by the
earlier consumer revolt over so-called negative
option billing. Chastened Rogers
executives apologized, and the company pulled
back its troops and retreated into
the arms of the CRTC.

In late February 1995 the federal communications
regulator began hearings to
review a Rogers complaint that PPC was violating
CRTC policy. After all, said
Rogers, Concord is part of the geographical
area over which Rogers holds a
monopoly. In addition, said Rogers, the fact
that the American firm GTE is the
majority owner of BC Tel meant that the telco
was prohibited by CRTC regulations
from having anything more than a 20 per cent
stake in a Canadian cable
operation.

These arguments were not without merit, but
Rogers' appeal to the government
regulator was more than a little ironic.
For if digital technology was what made
the wars of convergence possible, deregulation
is what made it inevitable.
Rogers was among the front ranks of companies
demanding that the CRTC ease up on
the regulations so that others with alternative
transmission networks could have
a share of Ma Bell's pie. In 1992, for example,
Rogers successfully lobbied the
CRTC for permission to set up its data communications
division - Rogers Network
Systems - which now competes with BC Tel
in the market for the expensive leased
telephone lines used by banks, universities
and high-tech companies with heavy
data demands.

Deregulation, however, cuts both ways. On
September 20, 1995, the CRTC ruled
that BC Tel's American ownership did render
it ineligible to operate a cable
service. However, the CRTC also ruled that
if a Canadian company wanted to come
in and set up on what was formerly Rogers
tuff, that was fine. PPC restructured
- BC Tel reduced its stake to 20 per cent
- and in June 1996, the company, now
called Pacific Place Cable, was awarded a
Class 1 licence to operate a cable
service in Vancouver. BC Tel lost majority
control. Rogers lost its
monopoly.

End of round one.

November 10, 1996. The tasteful living room
of a house in West Point Grey.
Reporters, politicians, techies and PR types
stand around on the hardwood floor
exchanging desultory small talk in between
sips of complimentary fruit juice and
coffee. Working the crowd is Glenn Wong,
the head of Rogers' operations in
British Columbia. A marketing wizard, Wong
was brought in as a fixer after
negative option billing put Rogers on a par
with chartered banks in the pantheon
of big, hated corporations.

The house itself - a 1920s cottage-style
bungalow - belongs to Bruce and
Patricia Gillespie. Bruce is a designer;
Patricia, a management consultant. Were
fractional children possible, the Gillespies
would have 2.4. As it is they have
only two. Both are blond, bright and computer-literate.
Holding the product
launch in the reflected glow of the Gillespies'
radiant upper middle class
niceness was, of course, Wong's idea. He
calls for attention and then announces
the reason for this little morning pow-wow:
Rogers is taking on the telcos with
a new and superfast Internet service, the
Wave.

According to Wong, the invention of the Wave
is comparable in importance to
Microsoft's launch of Windows. "Before, you
had text crawling across the screen.
Now there are graphical oriented computers
and multimedia. Before, it took half
an hour to download a video clip. With the
Wave, it takes 15 to 20 seconds."

As of now, Wong adds, the product is available
to households in West Point
Grey. By the beginning of 1997 the service
will be available in 90 per cent of
Vancouver. By the end of 1997 the Wave will
be available to 80 per cent of homes
in the Lower Mainland. The Wave is also being
offered simultaneously in other
parts of Canada through arrangements with
other cable companies like Shaw,
Cogico and Delta.

"Offering this kind of product," adds Wong,
"is an example of how we want to
compete."

With that Wong is finished and the show turns
back to the Gillespies.
Fourteen-year-old Sarah sits down at the
keyboard of the family computer and
begins downloading a video clip from the
MTV web site. With regular dial-up
Internet access this would be a good time
to reach for that unread copy of War
and Peace. This system doesn't even give
you time to crack open the cover, let
alone skim the first page.

In fact, the cable modem connecting this
PC to the Internet is rated at 500
kbps, more than 17 times the speed of the
standard 28.8 kbps telephone modem.
The cable network doesn't quite perform to
that speed, however, because the
local cable loop is shared with other households
in the area. In practice,
Rogers has found that the effective throughput
is about 200 kbps, a mere six
times as fast as the maximum possible speed
obtainable with a standard telephone
modem. The Wave has the additional advantage
that it's always connected. There's
no need to dial in, and surfing the web doesn't
tie up your phone lines.

The price of this haste: $55 a month, plus
a one-time installation fee of
$150. "That includes rental of the modem
and ethernet card," says Wave marketing
manager Glenn Beeswanger, with the practiced
lilt of one who has said this many
times, "plus unlimited access time, plus
five e-mail addresses, plus five
megabytes of space for a personal web page."

The $55 price tag may seem a bit steep compared
with the $20 a month charged
by most Internet service providers (ISPs),
but according to Beeswanger, a fair
bit of thought has been given to the pricing
strategy. "When you factor in the
cost of an added phone line, which you're
going to need if you spend any time at
all on the net, and the charges for extra
time and for web page space, $55 a
month looks pretty competitive."

Particularly when you consider the competition.
BC Tel's response to Rogers
Wave launch was a pair of full page ads in
small community weeklies like the
Courier and the North Shore News announcing
the advent of something called
ISDN@home. It's an acronym, of course. Acronyms
grow like fungus in the fallout
from the convergence wars. What it stands
for is unimportant (oh okay,
Integrated Services Digital Network), but
in essence, ISDN@home is a package of
two very fast phone lines, for use with either
a computer modem, a fax or the
regular telephone. Used separately, each
line transmits data at 64 kbps, or more
than twice the speed of a 28.8 modem. When
combined the two ISDN@home lines
deliver a speed of 128 kbps, about half the
speed of the Wave.

ISDN@home costs the same $55/month that Rogers
charges for the Wave, but it
doesn't include the $500 that's required
to purchase an ISDN modem, nor the
additional cost for an Internet Service Provider
- if you can find one that
provides dial-up ISDN service. As of writing,
not even Sympatico - BC Tel's
Internet provider - is ISDN-capable, though
it says it plans to introduce ISDN
service sometime in February. Other ISPs
are even more cautious. Lawrence
Tolton, owner of Portal, says he will set
up ISDN lines when and if there is
sufficient demand. So far there is not.

The ISPs' caution about rushing in to provide
ISDN service is understandable.
ISDN service has been available for almost
10 years now. It was first developed
for businesses that couldn't afford the more
than $2,000 a month it costs to
lease a 24-channel T1 line, but were still
interested in transmitting data. It
never took off. Even now BC Tel is working
on replacing ISDN with a newer,
faster four-letter acronym.

ADSL - yup, another acronym, this one standing
for Asymmetric Digital
Subscriber Line - is the telcos' real response
to the Wave. When the bugs are
finally worked out, it promises to provide
Internet service in the hundreds of
kbps, fast enough to give the Wave a good
fight, when and if it becomes
available.

At the moment, however, the Wave is the only
product on the ground with a
long-term future, and it appears to be gobbling
up territory. During a test
trial in the southern Ontario city of Newmarket,
the Wave captured just over 50
per cent of the existing market of Internet
users (about five per cent of all
houses) in just a few short months. As more
people come on to the net Rogers
expects to increase its percentage of the
market. By the year 2000, says
marketing manager Glenn Beeswanger, Rogers
plans to have two-thirds of home
Internet users signed up on the Wave. In
the absence of any more serious
competition - and isn't that always the rub?
- control of the access roads to
the virtual highway will belong to Ted Rogers.

For Rogers the victory will be sweet. Internet
service, however, is just one
small battle in the overall war of convergence.
Still un-fought is the conflict
between cable and satellite TV, the struggle
for supremacy between land lines
and wireless telephony and the looming battle
over local phone service. Expect
those conflicts to heat up as the millennium
draws to a close.